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Priceless Setbacks: 5 Failures to Take Your Business to the Next Level

If you ask me for some of the smartest advice I've ever gotten about business, I'll have to tell you it didn't come from any billionaire or business school grad.
Priceless Setbacks: 5 Failures to Take Your Business to the Next Level
Image credit: Steve Prezant | Getty Images

I’ve been very blessed, throughout my career, to work with some of the most impressive entrepreneurs around. From companies backed by Peter Thiel to Carlos Slim, I’ve observed several of the world’s savviest businesspeople set up shop, and I’m proud to have helped a couple of today’s unicorns -- the hottest startups with valuations of over $1 billion -- gain traction. But, if you ask me for some of the smartest advice I’ve ever gotten about business, I’ll have to tell you it didn’t come from any billionaire or business school grad. It came from a former Dunkin' Donuts baker.

His name is John Scalia, and he knows all about making dough, no pun intended. After years spent working for the proverbial Big Donut, already into his 40s, he quit, and together with his wife Deb, opened up his own place, Home Sweet Home Doughnut Shoppe in Great Barrington, Mass.

Related: The 12 Ways Smart People Fail at Business

Ever since I discovered it, I’ve been hooked. Not just because of their delicious freshly made products and old-time customer service -- it’s the opportunity to see the triumphs and tribulations of fellow entrepreneurs manning the front lines where margins can be thinner than a toothpick.

Ask him, and John will serve you not only a delicious chocolate glazed masterpiece but also a few pieces of indispensable advice everyone starting or running a small business should know:

Don't bank on compliments. 

When a famous restaurateur, Danny Meyer, raved about their doughnuts on Instagram, John and Deb thought this was a sign from the comfort food gods that they had entered the pearly gates. They imagined that the rave would bring fame, acclaim and fortune. That didn’t happen. And so, John now preaches: Encourage positive reviews and good press, but don’t think that any one compliment, no matter how generous or influential, could turn the tide.

Related: How 5 Entrepreneurs Went From Rock Bottom to Rock Stars

Think twice before expanding. 

In an economy that worships tech startups and often puts growth before profits, scalability is the operative term. Deb and John, too, drank some of that same Kool-Aid, and it almost killed them. After pouring time, equipment and money into a second location up the road on Main Street in Stockbridge, they were losing money, had no investors to lengthen their runway and had to fold the second location within nine months. Now, they’re focused on their store, and committed not to expand until it makes absolute financial sense to do so.

Stop looking to delegate. 

Skilled doughnut bakers are hard to come by, and John has put out feelers for someone to lighten his load so he wouldn't have to do all the baking himself. After a string of failed attempts, and doughnuts that literally fell flat, John decided that no one can match his dedication and commitment to quality. He still gets up at 1 a.m. to bake, and Deb still manages a team of high school students and senior citizens to help her serve customers and man the cash register. It’s their business, and that means that they are responsible for every aspect of it. It’s an old-fashioned concept, but it’s a big reason why locals have made the Shoppe a cult favorite. 

Related: Why You Must Embrace Failure to Succeed in Business

Admit your product isn't for everyone. 

As someone who struggles not to be overweight, I usually grab a box of tasty doughnuts for my kids and house guests and allow myself only the ice tea. Deb and John never push their doughnuts on me. In fact, they concede that doughnuts shouldn’t be an everyday pleasure, rather a special treat, even if that means selling less baked goods. That's a hard lesson to practice when business is slow and you need the cash flow, but it's a strategy that makes sense for their long-term sustainability. Honesty is always the best policy.

Force yourself to take a break. 

Probably the most important lesson John has to teach has to do with knowing when to take a rest. Exhausted with the daily drudgery of running a small business, John and Deb gave serious thought to selling out. Then, they decided to reevaluate, and agreed to close the shop not one but two days a week during the slow season when there are fewer tourists. It hurt their bottom line, but it did wonders for their relationship and their souls.

Related: How My Startup Failed -- But I Was Still Successful

And so, next time you think about the emotional rollercoaster that is running a business, think a little less like a MBA and a little more like a baker. It's not just about applying these lessons to help avoid the cash drain, the cold sweats of anxiety and how to stem the inevitable burn out. Instead, it's about the stubbornness to refuse to throw in the towel, even when you're getting beat down. It's about being brutally honest about what you do best and why you started the business in the first place, including tapping into the pride that comes from doing your own thing. It's about reimagining your business, rather than automatically shutting the doors. These are the priceless setbacks that can put your company back on a very sweet path.